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The following is total monthly budgeted cost and activity information for the fo

ID: 2522394 • Letter: T

Question

The following is total monthly budgeted cost and activity information for the four activity centers in the billing department of Oregon Power Company:

Variable

Fixed

Cost Driver

$79,050

$159,000

3,400 labor hours

$10,179

$27,000

2,900 letters

$130,000

$74,000

2,600,000 lines

$11,440

$76,000

22,000 accounts


In September, actual costs and activity were as follows:

Total Costs

Driver Amount

$233,959

3,250 labor hours

$36,388

2,890 letters

$211,885

2,760,000 lines

$87,165

21,900 accounts


Required
Compute the flexible-budget variances for the following two activity cost items (round all answers to the nearest dollar and enter favorable variances as positive numbers and unfavorable variances as negative numbers):

  Correspondence:

  Account billing:

Activity Center

Variable

Fixed

Cost Driver

Account inquiry

$79,050

$159,000

3,400 labor hours

Correspondence

$10,179

$27,000

2,900 letters

Account billing

$130,000

$74,000

2,600,000 lines

Bill verification

$11,440

$76,000

22,000 accounts

Explanation / Answer

Compute the flexible-budget variances for the following two activity cost items (round all answers to the nearest dollar and enter favorable variances as positive numbers and unfavorable variances as negative numbers):

Flexible budget Actual Flexible budget variance Correspondence 37144 36388 756 F Account billing 212000 211885 115 F